Download Technical guidance on LCDS for renewable energy development in

Technical guidance: A review of LCDS
for RE development in Vietnam
Karen Holm Olsen, Senior Researcher
[email protected]
Second Capacity Building Workshop on LCD and NAMAs
Da Son, Hai Phong, Vietnam, 16-18 December 2013
Outline:
• Objectives
• The global mitigation
challenge
• Existing policies in Vietnam
• Methodologies for
BAU/baseline scenarios
• The BAU/APS scenario for
5% RE in energy primary
supply
• Policy recommendations
Objectives
Objectives of the review
• To understand the work so far on development of
a LCDS for RE development in Vietnam
• Provide technical guidance on key issues:
o Establishment of baseline for BAU and
LCD/APS scenarios
o Policy recommendations
The global mitigation challenge
The mitigation challenge according to IPCC
 Without action - global CO2
emissions will grow
between 40 and 110%
between 2000 and 2030
 To stay below 2 degrees
global average warming
and avoid major damages:
• global CO2 emissions
should start declining by
2015 and
• be reduced with 50-85%
below 2000 level by 2050
Emission reductions required for stabilising climate
with fair distribution of effort
Impacts of 2° C warming – worse than expected
Expected sea level rise
Source: IPCC AR5 WG1 SPM. Figure SPM.9, 2013
Existing policies in Vietnam
Overview of energy and climate policy targets
Year
Type of target
Title of policy decision
Target
2007
Energy
National Energy Development
Strategy
Renewable energy share of total primary commercial energy supply in
2020 is 5%, by 2015 it is 8% and by 2050 it is 11%
2011
Energy power supply
National Power Development
Plan (PDP VII)
Renewable energy share of power generation is 4.5 % in 2020 and 6% in
2030

Wind power: 0.7% of total power generation by 2020 and 2.4 % by
2030. This translates to 1,000 MW of installed capacity in 2020 and
6,200 MW by 2030
2011
Climate
change
Reduce GHG emissions to protect the Earth’s climate – reference is
made to existing energy and industry policy targets
2012
Mitigation
2012
Mitigation
National Strategy on Climate
Change
(Decision 2139/QD-TTg)
National Green Growth
Strategy
(Decision 1393/QD-TTg)
Project for GHG management:
Management of Carbon Credit
Business Activities to the
World Market
(Decision 1775/QD-TTg)
Reduce GHG emissions from energy activities by 10-20% compared to
BAU in 2020 + 10% with international support and by 20-30% in 2030 +
10% with support.
Implement a number of sector specific GHG reduction targets:

Energy and transport: Reduce GHG emissions by 8% compared to
2005

Agriculture: Reduce GHG emissions by 20% compared to 2005

Forestry and land use: Increase the absorption of GHG by 20%
compared to 2005

Waste: Reduce GHG emissions by 5% compared to 2005
Observations
(In-)consistency across policies:
o The emission reduction targets for Green Growth and
GHG management are of a different kind: BAU vs.
2005 as baseline
o It makes a big difference in terms of mitigation
ambition, which target is used
o The base year approach gives the most certainty in
accounting for GHG reductions, which is needed for
trading in the world market
Methodologies for BAU/baseline setting
Aim of the publication
1. Provide overview of current practices
2. Show differences and commonalities in
countries’ approaches to baseline setting
3. Explain motivation of choices made
4. Highlight good examples and lessons learnt
5. Inspire other developing countries
6. Discuss significant capacity gaps
7. Inform discussions on guidelines
What is a baseline?
• Baseline scenario: A scenario that
describes future greenhouse-gas emission
levels in the absence of future, additional
mitigation efforts and policies.
• Often used interchangeably with “business
as usual”
• An estimation of the future, not a
prediction
Different types of reduction pledges under UNFCCC
Themes covered in the publication
Modelling tools
•Top-down, bottom-up or hybrid
•Balancing cost with functionality
Assumptions and
sensitivity analysis
•Definition: Inclusion of policies and revising the baseline
•Key Driver Assumptions
•Sensitivity Analyses
Data management
•Base year and UNFCCC emission inventories
•Emissions factor and activity data quality
•Institutional arrangement
Transparency and
inclusiveness
Reflections on
best/good practice
•Transparency and credibility
•Stakeholder involvement
•Options for peer review
•Transparency
•Key assumptions and uncertainty
•Guiding principles for good practice
Definition of the baseline
• Is the baseline a business-as-usual?
• Two defining points: inclusion of policies
and whether or not the baseline will be
updated.
Inclusion of policies
• Emissions trajectories are (hopefully!) greatly
affected by policy implementation
• Three questions for considering effects of
policy measures in baselines:
• Whether to include existing policies or no
policies at all (and if none, how to “extract”
effects of existing measures)
• Which measures to include as part of the
baseline?
• How to model the impact of those
measures?
Examples from the publication
• South Africa: essentially two baselines, with and
without existing measures
• Mexico and Brazil: no existing policies but
assessment of technology trends
• Indonesia: screening process to assess impact on
emissions of existing policies
Conclusion
• Policy circumstances vary by country and good
practice is to be transparent on the method used
Updating/revising the baseline
• Whether or not and when to update the
baseline as new data become available
• Trigger values for when assumptions have
been wrong could be used, or a defined
year interval (e.g. update every 2 years)
• Mexico has made legal provisions to update
on a ”regular basis”. South Africa will not
update.
Key driver assumptions
• Several key drivers
• GDP, structure of the economy, population,
energy prices, technological development…
• GDP is the most important key driver
• Often GDP forecats are defined for other
purposes...
Key questions to consider
• What is the definition of the baseline?
• How will existing and future policies be
handled?
• Will it be updated regularly?
• Will key driver assumptions have to be
defined by governmental targets?
• Good practice: To do sensitivity analyses
Transparency and credibility
• National and international credibility regarding the baseline
are acknowledged as key concerns.
• Nationally, credibility ensures credible national policy
planning
• Internationally, credibility ensures acknowledgement for
mitigation pledge and efforts.
• The global nature of climate change means that the better
governments understand the positions of other
governments, the more likely cooperative action becomes.
Key examples of good practice
• Clear definition and purpose
• Policies
• Revisions/updates
• Key drivers (GDP etc.)
• Uncertainty
The LCD scenario for RE development
Review of the LCDS – the energy balance
Energy Balance 2010 BAU
Primary Energy Supply
Mtoe
Coal
Oil
Natural Gas
Hydropower
Biomass
Renewable
Electricity Import
Total
Power Generation
Demand by Fuel
Conversion
Mtoe Effieciency TWh
Demand by Sector
Mtoe
14.60
17.70
8.40
2.20
8.60
0.30
4.70
0.31
17.00
2.40
0.16
4.60
7.90
0.47
43.10
2.20
1.01
25.90
0.00
0.00
0.00
0.30
0.50
1.80
Coal
Oil
Natural Gas
Hydropower
Biomass
Renewable
0.40
0.00
0.00
0.00
Electricity
52.20
17.50
2.45
92.40
Total
9.90
15.30
0.50
0.00
8.60
0.02
7.50
Mtoe
Residential
Industry
Transport
Agriculture
Commercial
10.80
17.50
11.10
0.60
1.80
Total
41.80
41.82
1 Mtoe = 11.63 TWh
92.4 TWh = 7.94 Mtoe
Source: Alternative Policy Scenarios for Renewable Energy Development of Vietnam (first draft), December 2013
BAU/APS scenarios by 2030
Demand by fuel
Mtoe
APS
BAU
Coal
23.60
24.10
Oil
46.00
46.80
Natural Gas
2.70
2.70
Electricty
41.80
42.70
Biomass
1.20
1.20
Renewable
2.20
0.70
Total
117.50 118.20
Primary energy supply
Mtoe
APS
Coal
Oil
Natural Gas
Nuclear
Hydropower
Biomass
Renewable
Imported
electricty
Total
BAU
85.8
47.9
17.9
15.1
5.5
3.2
10.4
91.8
48.7
18.1
15.2
5.6
1.3
2.5
1.3
187.1
1.4
184.6
CO2 emission reductions
Source: Figure 3.3 in Alternative Policy Scenarios for Renewable Energy Development of Vietnam (first draft), December 2013
Alternative Policy Scenario
• Small hydro power: 4,000 MW in 2030; BAU 2,600 MW
• Biomass power plant: 2,000 MW in 2030; BAU of 100
MW
• Wind power plants: 6,200 MW of installed capacity in
2030; BAU 200 MW
• Biogas energy: a) cooking: 12% of households in rural
areas use biogas in 2030; BAU 2%. b) power generation:
60 MW in 2030; BAU 0 MW
• Solar water heaters: 70% in urban areas and 40% in
rural areas by 2030; BAU 10% in urban areas and 3% in
rural areas
• Bio-fuels for transport: 1,800 ktoe in 2030; BAU 600ktoe
Policy recommendations
The LCDS for RE development
• The LCDS study uses the 2007 target as the aim of the APS scenario:
‘RE share of total primary commercial energy is 5% by 2020’
• Ideally, actions and policies already planned should be part of the
baseline (Source: the UNFCCC Handbook on NAMAs, 2013)
• Good practice for BAU scenarios considers whether or not to include
existing policies in the baseline
• What are the considerations behind choosing an 2007 energy policy
target as the aim of the LCDS in 2013?
From the Stern Review of the economics of
climate change, 2006
 Climate change is the greatest market failure ever seen
Postponing emission reductions is very costly, it implies:
Greater impacts and adaptation costs
Locking in high-carbon infrastructure (such as power-plants
expected to last 40-50 years) and delaying ’clean’ technology
More drastic cuts in emissions later on
 Putting an appropriate long-term price on carbon is the first element of
policy – either through tax, trading (cap and trade) or regulation
 Technology transfer needs more than a carbon price – policies and
international cooperation is necessary, e.g. R&D
Scaling-up carbon finance to developing countries can support a
transition to low-carbon development
Ideas to enhance the LCDS for RE development
• Vietnam has an emission reduction target for energy and transport:
8% GHG reductions by 2020 compared to 2005 (Decision 1775/QDTTg)
• For policy coherence compare what does the 8% GHG reduction
target translate into expressed as ‘deviation from BAU’?
• An alternative to BAU baselines is to evaluate a NAMA in terms of its
contribution to a national or sectoral ER target
• To strengthen the LCDS analyse what are the technical options to
achieve the 8% GHG emission reduction target?
Opportunities to attract climate finance
• By choosing an existing energy policy as the aim of the LCDS study it
will be difficult to attract international support. Actions are unlikely to
be considered additional, nor transformational and the mitigation
ambition (3% by 2020) falls short of what IPCC recommends to stay
below 2 degrees of warming
• NAMAs following the LCDS can be recorded in the UNFCCC Registry
as domestic action, for international recognition
• To attract climate finance in support LCDS and NAMAs, the Green
Climate Fund is mandated to support NAMAs for transformational
change to low carbon and sustainable development
Elements of a paradigm shift for transformational change
Source: NAMA Facility, 2013
Thanks!